economic significance of industrial design awards: A conceptual framework, The

Design Management Journal, 2002 by Gemser, Gerda, Wijnberg, Nachoem M

Abstract

This paper explores the importance of industrial design awards in shaping competition. We propose that there exists a positive relationship between winning industrial design awards and the corporate performance of the award-winner, and that this relationship is moderated by, first, the type of products involved, and second, by the reputation of the award. The reputation of an award, in turn, is considered to be the result of a) the fit between the selection system dominating the relevant industry and the selection system expressed by the award and b) other institutional factors specific to the award, such as the age and the monetary value of the award.

Introduction

An increasing number of firms invest in industrial design to gain a competitive edge in the marketplace (Berkowitz, 1987; Bloch, 1995; Christensen, 1995; Dickson, et al., 1995; Lorenz, 1986; Netherlands Design Institute, 1994; The Economist, 1995; Walsh, et al, 1992). Industrial design can be defined as the activity that transforms a set of product requirements into a configuration of materials, elements, and components (Ulrich and Pearson, 1998; Walsh, et al., 1992). This activity can have an impact on a product's appearance, user friendliness, ease of manufacture, efficient use of materials, functional performance, and so on (Bloch, 1995; Ulrich and Pearson, 1998; Walsh, et al., 1992). These possible design contributions can be translated, for example, into better sales and higher profit margins for a company's products compared with competitive products without specific design investments.

First, tentative evidence on the profitability of design investments has come from case studies of successful firms or projects (Design Council, 1990; Lorenz, 1986; Smith, 1994; Svengren, 1994) and from marketing-oriented research into the importance of design or its component elements (aesthetics, ergonomics, and so forth) in purchasing decisions (Berkowitz, 1987; Bruce and Whitehead, 1988; Veryzer and Hutchinson, 1998; Yamamoto and Lambert, 1994). This last decade, more-specific quantitative evidence on the positive effects of industrial design investments on company performance has become available (Gemser and Leenders, 2001; Groupe Bernard Juilhet, 1995; Platt, Hertenstein, and Brown, 2001; Roy, 1994; Ulrich and Pearson, 1998; Walsh, et al. 1992).

Although all the empirical studies cited above provide evidence that investing in industrial design has a positive effect on company performance, there are also indications that this effect is not unconditional, but dependent on factors such as industry evolution (Gemser and Leenders, 2001), design practice (Gemser and Leenders, 2001; Jevnaker, 2000), and the ease by which product design, the outcome of the industrial design activity, can be imitated (Gemser, 1999; Gemser and Wijnberg, 2001). Thus, while investing in industrial design seems important for company performance, there is a need for more research on the nature of this relationship (Bloch, 1995; Ulrich and Pearson, 1998).

This article explores the role of design prizes and awards in shaping a firm's competitive position. There have been prior sociological and historical studies into cultural awards and prizes (Levy, 1987; Luis, 1997; Osborne, 1989; Todd, 1996) and even a few studies on the economic value of particular prizes (Dodds and Holbrook, 1988, on the value of Oscar nominations and awards; Rajun and Tamimi, 1999, and Ramasesh, 1998, on the economic value of the Malcolm Baldrige National Quality Award; and Goodrich, 1994, Roerdinkholder, 1995; and Walsh, et al., 1992, on design awards). However, there has as yet been no serious study on the relationship between awards and competitive processes. This paper seeks to fill this gap. To this end, a conceptual model and several propositions are developed. The model, shown in Figure 1, draws from insights gained from studies we have completed ourselves, as well as from relevant work of others. The model may help to provide a more systematic approach to the study of the economic importance of design awards and may facilitate the undertaking of empirical work on this subject. The results of this future empirical research testing our model may, in turn, help management to decide if and how resources should be allocated in award and prize competitions.

In brief, a positive relationship between winning industrial design awards and the corporate performance of the prize-winner is hypothesized, but, as Figure 1 shows, we suggest this relationship is moderated by, first, the type of products involved, and second, by the reputation of the award. The reputation of an award, in turn, is hypothesized to be a result of a) the fit between the selection system dominating the relevant industry and the selection system expressed by the award and b) other institutional factors having an effect on the reputation of the award, such as the age and the monetary value of the award.

In the next sections, we will explore the different variables included in the model and the proposed relationships. In section two, we briefly discuss the concept of "selection system" to describe competitive dynamics. In section three, we will attempt to shed more light on the essential characteristics of awards. In sections four to six we will analyze the economic functions of awards and discuss variables that can affect the economic impact of awards. Based on our review of the relevant literature, we formulate some propositions and provide suggestions for future empirical work, in the concluding section.